Nick Clegg will today promise to give an extra £1 billion to older voters over
the next five years by raising pensions immediately.

The Liberal Democrat leader will launch his party’s manifesto with a pledge to raise state pensions in line with the rise in average earnings, restoring a link broken 30 years ago.

He will accuse Gordon Brown of failing to ensure pensioners received £35 billion of benefits to which they were entitled since 1997.

Mr Clegg will also attack the Government for allowing the state pension to sit at just 16 per cent of the average weekly wage while almost one in five pensioners lives in poverty.

The Lib Dems would act immediately to tie the annual increase in pensions to average earnings or inflation — depending on which is highest — and would offer a minimum increase of 2.5 per cent regardless of the other factors.

Pensions currently rise in April based on the level of inflation the previous September, but low inflation and rising salaries under New Labour have seen pensioners lose out.

The Lib Dems last night said Labour had broken a promise that pensioners would “share fairly in the increasing prosperity of the nation”. Mr Clegg claimed Labour’s promise to restore the link with pay in 2012 would effectively cut pensions by £300 million because inflation is expected to outstrip earnings by then.

Danny Alexander, the lead author of the manifesto, said: “Gordon Brown has betrayed millions of pensioners by devaluing the state pension year after year.”

Mr Clegg will offer an end to “65 years of the same parties letting you down”. He will pledge to redraw the tax system to favour poorer voters and to reform politics in the wake of the MPs’ expenses scandal.

Mr Clegg will say voters can end the “stitch-up” of “red-blue, blue-red politics.”

“Elections that can really make a difference don’t come along very often,” he writes in the manifesto. “This is one of them … it is time for something different. It is time for something better.”

Mr Clegg will promise to lift 3.6 million of the lowest earners out of income tax, give the average worker a £700 tax break and spend thousands more on each of the poorest primary school pupils.

He plans to fund the moves with a punishing tax regime for the rich, spanning an annual one per cent “mansion tax” on homes worth £2 million, increased capital gains tax and closing loopholes. He will also promise to give voters the right to sack their MP and pass a “Freedom Bill” restating traditional civil liberties.

Mr Clegg will launch the manifesto at the London headquarters of Bloomberg, the financial news company.

He is keen to present an austere event to reflect straitened times and to contrast with the Tories’ more glamorous launch at Battersea Power Station yesterday.

Mr Clegg will also be joined by Mr Alexander and Vince Cable, the party’s deputy leader and Treasury spokesman.

Mr Clegg and Mr Cable announced yesterday that they would ban bankers from receiving cash bonuses of more than £2,500. They said the measure, along with a special 10 per cent tax on bank profits, would help rid the City of its “obscene” pay culture.